Restaurants have started charging a higher price by as much as 10% from customers on online food delivery platforms Zomato and Swiggy. The highest was a 60% premium.
The reason they have stated for this difference is higher costs from commissions and promotions.
Difference Of 10% in Online And Offline Menus Of Restaurants
Online and offline prices of restaurants were compared by a survey, which has revealed this price hike.
Restaurants have begun charging consumers an average of 10% more on food delivery apps Zomato and Swiggy than the prices listed on menus in their stores, citing higher costs from commissions and promotions.
Restaurant commission rates, ad sales, and customer delivery charges generate revenue for aggregators. Discounts and other variables are included in the costs.
As per the survey, “Profitability focus has pushed food-tech companies such as Zomato and Swiggy to raise take rates (take-out charges), which in turn has prompted restaurants on differential pricing—packing and delivery charges remain over and above.”
80 restaurants were surveyed in the top eight cities and their online and offline prices were compared for this report.
Branded Restaurants Charging High Premiums?
It generated 240 orders ranging from $120 to $2,800 per order and chose a mix of quick service restaurants (QSRs), full-service restaurants, cafes, ice cream parlors, and others. It was estimated that 80% of the restaurants surveyed used differential pricing that was higher for online orders.
As per the report, more than half of these establishments charge a premium of less than 10%, with the median being 10-11%. However, nearly 20% of them charge a premium that is greater than 30% of the printed (online) menu pricing.
The report also notes a few instances of premiums that were greater than 40% (the highest being more than 60%). The report states that this pricing strategy was mostly applied to specific items rather than the entire menu.
As per the report, Industry interactions indicate that some larger restaurants are experimenting with different products for aggregators to enable differential pricing. Additionally, branded QSRs charge the following premiums: Subway 10-15%, KFC 10%, Pizza Hut 5-6%, and Dominos 4%.
The report also states that some establishments, particularly ice cream parlors, charge lower prices than restaurants.